Rising food costs come amid a slide in the currency, which could further stoke inflation. (Bloomberg/File)
Cooking up Indonesia’s national dish is a lot more expensive these days.
A sharp rise in the cost of some of the key ingredients that make up a rendang curry -- chili peppers, shallots and beef -- is putting the popular dish out of reach for many Indonesians. It’s also driving up inflation in a country that’s struggling to contain a currency rout and a surge in oil prices.
The cost of chili -- ubiquitous in Indonesian cooking and an essential ingredient in rendang -- peaked at 41,350 rupiah ($2.98) a kilogram on May 18. That’s up 24 percent from a year earlier, according to data published on a Bank Indonesia price monitor.
The spike may show up in May inflation data due to be published Monday. While recent figures show consumer-price growth was fairly subdued at 3.4 percent in April, food prices picked up considerably. They climbed 5.2 percent from a year ago, the fastest pace since December 2016.
Price pressures also coincided with the start of the Muslim fasting month of Ramadan in May, when Indonesians usually stock up on food for evening feasts.
“The driver of May inflation is volatile food and administered prices,” said Josua Pardede, an economist at PT Bank Permata in Jakarta. He said the government has to do better at anticipating food price increases, particularly during the festive season.
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The rising costs also reflect persistent supply-chain problems. Even though Indonesia -- an archipelago of more than 17,000 islands -- boasts a coastline of 50,000 kilometers, it’s been running low on salt. And to keep a lid on rice prices, the government has enlisted the help of state-owned banks to sell the staple food.
“Volatile food inflation is growing faster than headline inflation, indicating that the supply of food commodities needs to be improved,” Pardede said. “The logistics management also needs to be improved to solve the shortage supply of food commodities in several regions.”
Rendang shopping list
Chili - 24% increase
Shallots - 15% increase
Beef - 3% increase
Rice - 4% increase
* Price change in year to May 18
Rising food costs come amid a slide in the currency, which could further stoke inflation. The central bank has already raised interest rates twice to help stem an emerging market selloff that’s seen the currency fall more than 3 percent against the dollar since the beginning of February.
The central bank said last week it will pursue a “pre-emptive, ahead-of-the-curve and front-loading policy rate response” to stabilize the rupiah, while consistently controlling inflation within the target range of 2.5 percent to 4.5 percent.